In order not to surprise us with the Treasury, it is necessary to know exactly what are the expenses that can be paid as representation expenses and adopt a series of management rules.
As this case is an issue that is unfortunately current, the responsible and correct use of company cards by administrators and executives is in many cases recommendable for management as long as certain requirements that we review below are met.
Company representation expenses
These expenses, normally trips, stays, company meals or with clients, as well as gifts to suppliers and clients, will have to be justified with invoices or receipts delivered to the company by the cardholder.
However, the Corporate Tax Law does not speak of representation expenses but of fiscally deductible expenses and only those expenses that correspond to real operations, are related to obtaining income, duly accounted for, have been temporarily allocated in accordance with accrual and are documented justified.
Even if these fundamental premises are met, art. 15 of the LIS establishes that there are certain items that in no case will be considered tax deductible, among them, donations and liberalities. Expenditures for public relations with customers or suppliers, those incurred in relation to company personnel, according to usage and customs, and those incurred to promote directly or indirectly, will not be considered liberalities and therefore will be tax deductible. , the sale of goods and provision of services, and those correlated with income. For its part, art. 15 LIS cited, determines that the expenses for attention to clients or suppliers will be deductible with the limit of 1 per 100 of the net amount of the turnover of the tax period.
For its part, art. 11.3 LIS establishes that for expenses to be considered tax deductible, they must be recognized in the profit and loss account.
Manager's personal expenses
These payments will be borne by the holder who benefits from the company card and the company can settle them through discounts on the corresponding payroll or per diems, or consider them remuneration in kind, with the consequent declaration in the IRPF of the beneficiaries and the appropriate withholding. for de side of the company.
Suggestions for managing company cardsto
The company must clearly define the criteria for using the cards, the expenses that can be made with it and the people who can use them.
In the event that personal expenses are allowed, it is equally important to inform the holders of the way in which the payments of the corresponding remuneration, allowances or payroll will be deducted, as well as the tax treatment that the holders must take into account in their personal income tax return. .
Given that the Corporate Income Tax Law in force for years beginning on or after January 1, 2015, sets a limit for total business representation expenses at 1 percent of the net amount of turnover, it will be necessary to distribute the possible volume of spending among all cardholders, implying that each card will have a spending limit that each cardholder must know and the financial department will have to control that this limit is not exceeded.
Regarding accounting and payment control, the person responsible for keeping the records of the cards and checking the flow of operations must be defined.
The person responsible must always collect the corresponding receipt that meets the tax and accounting requirements, normally the invoice, although sometimes a simplified invoice or receipt may be sufficient.
They will be recorded in different accounts depending on the nature of the expense and its tax treatment. It will be verified that all the expenses recorded in the account already have the respective receipts and if not, collect them from the corresponding person.
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